Texas politicians hand out millions in bonuses to employees who leave soon after

State officials gave nearly $50 million in bonuses for departing staffers

Former Gov. Rick Perry ﻿doled out tens of thousands of dollars in bonuses for top aides in his final weeks in office.

Former Gov. Rick Perry ﻿doled out tens of thousands of dollars in...

AUSTIN - For years, as former Gov. Rick Perry cultivated a conservative reputation and prepared to run for president, he avoided giving his staff large bonuses.

Then he came to the end of his tenure.

The Republican doled out tens of thousands of dollars in bonuses for top aides in his last weeks in office, including $137,205 on a single day the month before leaving - more than he gave in the previous four years combined, and more than almost any other outgoing American governor gave in 2014, records show. The aides all left with Perry, and soon after, one joined a political group promoting his 2016 bid.

Perry's largesse was no anomaly. Texas officials increasingly are taking advantage of loose rules to hand out big bonuses just before leaving office, or to well-paid aides who themselves are on the way out, even though the money is supposed to be used in part to retain staff, a Houston Chronicle examination has found.

State officials have spent nearly $50 million over the past decade on bonuses for departing employees and often have not justified the gifts as required by law, the review found.

Perry and other officials defended the spending, saying it motivated employees and actually saved money because it was in one-time rewards, instead of permanent pay raises.

But state Rep. Chris Turner, a Democratic member of the General Investigating & Ethics Committee, promised to review the bonuses and said they raise "tremendous questions about whether taxpayer money is serving taxpayers."

The issues have grown as annual spending on bonuses by Texas state agencies has tripled over the past decade to $65.4 million last year, according to an analysis of the more than 193,000 payments over that period.

Overall, the state spent $355 million on bonuses between September 2005 and September 2015, including $259 million on so-called "one-time merit payments" that are subject to almost no rules and are not audited.

Merit payments

Unlike retention bonuses, which are capped at $5,000 and must be repaid if a recipient leaves within a year, or investment bonuses, which are audited and tied to performance benchmarks, one-time merit payments can be given in any amount as long as the agency stays within its budget. The only rules: Officials must keep a justification for each bonus, attempt to spread them out by job type and refrain from giving them to staff who were hired or received another merit payment in the previous six months.

But while some agencies complied with requests for justifications, the Governor's Office, General Land Office, Railroad Commission, Department of Public Safety, Department of Savings and Mortgage Lending and others could not provide any explanation for some payments.

An analysis also indicated the State Auditor's Office and the Department of Transportation have spent tens of thousands of dollars on merit payments given less than six months after a previous merit payments. The Department of Licensing and Regulations and the Employees Retirement System have spent hundreds of thousands on merit payments given less than six months after employees had received either retention or investment bonuses, the analysis showed.

The analysis also identified roughly $30 million in largely unregulated one-time merit bonuses given to employees who left less than a year afterward, more than three-fifths of the nearly $50 million in bonuses for departing staffers over that time.

'One strategy'

The Chronicle focused on bonuses for departing employees after agencies repeatedly said the purpose of their bonuses was to retain staff.

"Retaining employees is an ongoing issue," said Terry Clawson of the Texas Commission on Environmental Quality, for example. "Merit pay, including one-time merits, is one strategy to retain employees."

That agency, however, has given $1.64 million in bonuses over the past decade for employees who left less than a year later.

Clawson responded to that by saying many other bonus recipients have stayed and that the agency cannot predict when every employee is going to leave.

In all, 66 state agencies have given one-time rewards of at least $5,000 to employees who left soon afterward, according to the analysis, which combined two databases from the Comptroller's Office.

Perry's last-minute bonuses stood out relative to his past. In his first 12 years as governor, he gave just one bonus of more than $3,000.

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He gave 16 in December 2014, his last month in office, including $12,700 for his budget director, Kate McGrath, who had gotten a $7,000 one-time gift nine months earlier; $8,900 for his legislative director, Ken Armbrister, who made a $180,000 annual salary; and $13,500 for his chief of staff, Kathy Walt, who had a $270,000 salary and later joined the political group promoting his campaign, RickPAC.

A survey of the dozen other states that changed governors this year showed that only former Gov. Jan Brewer of Arizona gave more bonuses in her last year, although Illinois and Arkansas denied information requests.

Walt, who said there was "absolutely no connection" between her bonus and later work as RickPAC's volunteer treasurer, said Perry used rewards to entice employees to stay until the end of his term, instead of leaving early for new jobs.

"Gov. Perry has an unparalleled record of success in job creation, reducing state spending and cutting taxes," Walt said. "Every agency head has the discretion to award raises, promotions and bonuses within their budgets, and I think it's important for your readers to know that when Gov. Perry left office he left the office in good fiscal health with millions of tax dollars remaining in the agency's accounts."

Former Texas Agriculture Commissioner Todd Staples responded similarly when asked about $57,000 he gave the Friday before he left in January.

"The team managed to come in under budget, return taxpayer dollars and fulfill their mission, and any compensation and bonuses paid were more than earned," Staples said.

Transportation agency

Still, the bonuses from Perry and Staples paled in comparison to the amount spent on departing staff at agencies such as the Transportation Department.

In 2013, former Executive Director Phil Wilson's last year in office, that agency spent $2 million on bonuses for departing employees, a significant increase from the $93,000 the year before.

Agency spokesman Mark Cross said the increase "had nothing to do with the personnel in charge." Instead, he said, it was due to an agency decision that year to use bonuses in lieu of pay raises.

Records, however, show the agency spent more on pay raises in 2013 than in 2012.

Over the past decade, the agency that has spent the most on bonuses for departing staffers has been the Department of Criminal Justice, at $8.7 million, but most of those were for more regulated retention bonuses. Those went to officers at understaffed prisons, a spokesman said.

Former Teachers Retirement System head Steve LeBlanc got the overall highest bonus for a departing staffer, a $267,000 investment bonus on top of his $360,000 salary in February 2012, before leaving that June after four years at the agency.

The highest "one-time merit payment" went to Stephen Goodson, the former chief auditor of the Department of Public Safety, who got $54,000 two days after he resigned his $162,000-a-year job in September 2014. The agency could not provide any justification for the move; minutes from a Public Safety Commission meeting say it was awarded "as recognition of his contributions to DPS." A spokesman declined comment.

Other large bonuses were awarded this year by the Employees Retirement System of Texas, when departing chief Ann Bishop gave her second-in-command a $36,600 one-time merit payment seven months before they both left for the private sector. Bishop also gave herself a $109,000 investment bonus.

But the best illustration of the trend may be former Land Commissioner Jerry Patterson, a Republican who drew attention this fall for one-time merit bonuses but has escaped scrutiny for their timing.

'Worth a lot'

Patterson, who did not seek re-election last year so he could run for lieutenant governor, handed out $352,000 in bonuses in June 2014, the month after he lost the primary runoff to now-Lt. Gov. Dan Patrick. Eighteen highly paid employees got at least $15,000 extra, including six top aides with ties to the commissioner's campaigns who each received $20,000 and all left shortly after him.

Then, over his remaining half year in office, Patterson gave another $675,000, including $30,000 to a top aide who had received $15,000 exactly six months earlier. That official, an assistant general counsel with a $153,000 salary, was gone within weeks.

Patterson said that the official "got a lot because he was worth a lot" and was wanted by other employers.

In general, he said all his bonuses were approved by a team to reward accomplishments.

The former land commissioner acknowledged giving more bonuses in his last year in office proudly, saying it was a banner year, with the agency leasing and selling resources to bring in record revenue for public schools.